Creative Components Iowa State University Capstones, Theses and Dissertations

Fall 2020

Social media marketing and the new normal for small retail Social media marketing and the new normal for small retail

businesses businesses

Malvika Rajagopal Iowa State University

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Creative Component

Social media marketing and the new normal for small retail businesses

by

Malvika Rajagopal

The Creative Component submitted to the graduate faculty

in partial fulfillment of the requirements for the degree of

MASTER OF SCIENCE

Major: Apparel Merchandising

Program of Study Committee:

Dr. Linda Niehm, Major Professor

Dr. Doreen Chung

Dr. Sekar Raju

Iowa State University

Ames, Iowa

2020

Copyright © Malvika Rajagopal, 2020. All rights reserved.

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Creative Component Question 1

The U.S. retailing industry is experiencing unprecedented change for a variety of reasons.

Disruptions caused by the COVID-19 pandemic have further amplified the challenges for

retailers. Retailers of all sizes have been impacted by these shocks; however, small and

medium-sized firms (SMEs) have been particularly affected. This is due in large part to a

range of resource limitations, including digital readiness. Please draw from this scenario to

answer the following series of questions. Provide reference citations (APA format) to

validate your research.

Provide a concise overview of the current retail industry status in the U.S., including

additional challenges posed by COVID-19. Assess the major competitive advantages or

disadvantages for small retail firms in this climate (use SWOT approach to analyze). Also,

suggest competitive approaches through digital platforms, innovative marketing, and

operational practices that would support the sustainability of a small firm given the

challenges you identify.

Overview Of The Current Retail Industry Status

The retail environment has witnessed a plethora of changes due to evolving business

trends, innovative products, distribution concepts, and shifts in consumer behavior over the past

two decades. The most drastic change was to e-commerce from brick and mortar stores (Wertz,

2019). This was followed by a decrease in mom-and-pop stores and an increase in larger retail

formats (Klimek, Jarmin & Javier, 2005). Over the last decade, there has been an extensive

increase in e-commerce sales (Sabanoglu, 2020). The growth of e-commerce has, however, not

been evenly distributed among companies. Amazon alone generated a net sales of $96.15 billion

in 2020 (Statista, 2020).

Not only has there been a seismic shift to e-commerce in the past decade, but also an

evolution to omni-channel retailing. ‘omni-channel’ and ‘multi-channel’ are often used

interchangeably. However, Verhoef, Kannan, and Inman (2015) mentioned that an omni-

channel platform is one without boundaries between physical and online retailing. From the

consumers’ perspective, although there are two separate platforms, they both should seamlessly

exist to fulfill orders. A significant change in the traditional retail business model was required

to switch to omni-channel retailing. Obviously, only larger retailers were able to transition into

omni-channel, as it requires an array of resources within the business (Davis-Sramek, Ishfaq,

Gibson, & Defee, 2020). In 2019, smartphones aided in this shift, increasing online sales by

60% (Clement, 2020). The use of mobile devices to shop online has helped increase sales in

areas with lesser development in terms of the digital environment, giving way to a new term

called mobile-commerce or M-commerce. Mobile commerce (M-commerce) has been defined

as the use of mobile phones to complete transactions online, such as buying and selling products,

online banking, and paying bills (Bloomenthal, 2020). M-commerce has been incredibly popular

in South Korea, where online sales have gone up by 65%, leading other countries to adopt this

exchange method (Clement, 2020).

More recently, the COVID-19 pandemic has severely impacted US retailers, including

large stores such as TJX and Ross, and small retailers across the US and the world (CNBC,

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2020; Retail Dive, 2020). While the U.S. government has provided over $2 trillion dollars to

both customers and retailers as stimulus payments, many economists are still trying to decipher

how retailers may find a way out of the recession with the number of COVID-19 cases still rising

(Rodeck, 2020). The retail industry had been struggling to adapt to the e-commerce boom,

caused by Amazon and other retailers, even before the novel coronavirus and the recession-

induced pandemic. The pandemic has forced large and small retailers to close or modify their

brick and mortar stores, and increase sales online, which has created uncertainty about the future

of ‘in-person’ shopping.

The pandemic has brought about many changes in the retail industry, and the shift to e-

commerce is here to stay, bringing about a new normal. The current circumstances have been

particularly challenging for small businesses to manage and sustain in-store sales, given social-

distancing restrictions (Forbes, 2020). Consequently, e-commerce sales have increased, making

the adoption of digital marketing and social media by small businesses highly relevant (Forbes,

2020). The pandemic has changed the retail landscape as we know it in both urban and rural

areas.

Competitive Advantages

Unlike before, where money, human resources, land, and high sales volume were

considered competitive advantages, intangible resources (e.g., knowledge, speed, services, and

experiences) are the fuel to business success in the 21st century (Keller & Price, 2011; Pine &

Gilmore, 1999). Social media has overtaken other marketing platforms. It is essential, therefore,

to consider digital marketing as a source of tremendous competitive advantage that can help a

business to grow and scale (Verma, 2018). Community support, company culture, and social

capital formed with customers and other stakeholders are critical competitive advantages for

small retailers. All of these relational resources may be fostered through social media marketing

by small retail businesses (Keller & Price, 2011).

Porter (1985) outlined three crucial factors for companies to achieve competitive

advantage: cost leadership, differentiation, and focus. When a company provides a product at a

reasonable cost compared to its competitors, it would be considered a cost leader (Porter, 1985).

Walmart, Target, and large department stores are examples of cost leadership as they mass

produce and source goods, allowing them to gain cost and volume advantages (Keller & Price,

2011). Smaller retailers might not be able to achieve cost leadership but can aim to achieve

differentiation by offering unique products or services. By providing innovative or unique

products, like Starbucks' unique Pike’s Place roast, smaller retailers can differentiate their

products from their competitors. Small businesses can also be innovative by seizing an

opportunity and providing services (Drucker, 2015). Customer service and quality could be

other factors that may lead to product differentiation. Porter describes focus as the company's

understanding and attracting the correct target market, which is also a critical need for small

retailers.

Since digital media and social media have been a competitive advantage for larger

retailers, the low cost of using Social Media Platforms (SMPs) could likewise be helpful for

small businesses. An SMP is a web-based platform that facilitates the sharing of information and

networking with people from different places (Obar & Wildman, 2015). Examples of SMPs

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include Facebook, Instagram, Snapchat, Pinterest, Twitter, LinkedIn, etc. (Social Platform,

2017). The resource-based view (RBV) is a suitable theory to identify the competitive

advantages of a small business (Barney, 1991), framing SMPs as a key strategic resource. One

of the many techniques used to analyze competitive advantages based on the RBV is a SWOT

(strengths, weaknesses, opportunities, and threats) analysis. Based on the RBV, sustained

competitive advantage is defined as a value-creating strategy that is rare, non-imitable, and not

simultaneously implemented by competitors and, it would not be easy to duplicate (Barney,

1991). In order to develop unique competitive advantages, as Porter suggested, a company must

first analyze the resources it possesses (Pelt, 2010). The RBV complements Porter's five forces

and helps companies to analyze their resources. The RBV will be discussed in more detail in

upcoming sections of the paper. Based on the RBV, a SWOT analysis of small retail businesses

in Iowa was conducted to identify the competition, threats, and opportunities in the current

market environment.

Figure 1

SWOT Analysis for Small Iowa retail businesses

Strengths

• Many small business owners found

that the perceived ease of use is

higher for SMPs and digital

technology, according to a recent

study (Ritz, Wolf & McQuitty,

2018).

• Strong sense of community and

network for a customer base

• Recognized and trusted brand

amongst the community

Weaknesses

• About 60% of businesses survive for

at least two years, and 50% survive

for five years (Small business

administration, 2012). These issues

are mainly due to the unavailability

of resources or lack of knowledge

(Anderson & Ullah, 2014).

• Rural small businesses face many

more issues because of their remote

location, financial constraints, aging

population, etc.

Opportunities

• More people are relying on social

media, and the transition of small

business to SMPs would be easier

for customers to adapt

• Higher ability to reach a broad

customer base

• Familiarity with online marketing

and awareness of COVID-19

pandemic

Threats

• Competition with larger companies

who use social media marketing

• The constant evolution of newer

technology

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The COVID-19 pandemic has made it harder for large and small businesses to adjust to

the market and economic changes. Adapting to new rules and regulations to comply with the

Center for Disease Control (CDC), including regular sanitization of products and social

distancing, has been difficult for small brick and mortar stores (Johnson, 2020). Safety and

health of consumers and employees are some of the main retailer concerns during this pandemic,

and one of the primary challenges is to adopt safe practices for indoor shopping. However, this

drastic shift in the retail industry has enabled online shopping with renewed vigor. Digital media

has been prevalent in the retail industry for over 10 years, and consumers are more reliant than

ever on online shopping (Yohn, 2020). In 2020 alone, there have been approximately 20 million

visits to grocery stores online (Clement, 2020). Consumers are also not willing to accept a

mediocre online shopping experience that might have been expected before the pandemic (Yohn,

2020).

Social media marketing is a necessity at this point for small retailers to be competitive in

the COVID and post-COVID era. Three small retail business owners from Iowa were

interviewed for the present study in regard to their social media practices. Their identities

remain anonymous due to a confidentiality agreement with the university Institutional Review

Board. One of the interviewees, when asked about the importance of social media during the

pandemic, mentioned, “I can't imagine a world without social media at this point. But you know,

it has its pros and cons. But ultimately, I'm glad it exists as far as growing our business”

(Anonymous participant 2 in discussion with the author, October, 2020). The interviews

conducted for the present study have been used to inform digital marketing strategies and

practices for small retailers. The interviews have also been used to understand how small

retailers are using social media to manage during the COVID-19 pandemic.

Creative Component Question 2

Choose an appropriate marketing theory, model, or framework (i.e., resource-based view,

Porter’s theory of competitive advantage, social capital, diffusion of innovations, or other

as appropriate) to explain and support the market positioning and strategic approach for a

hypothetical small retail firm in the Iowa market--you may specify the focus of the

business. Discuss why and how this theory, model, or framework will provide appropriate

strategic guidance for the direction and growth of this and other small retail firms.

Resource-Based View

The resource-based view (RBV) aids in the analysis of competitive advantages, and it

will be used to theoretically frame the next section of the paper addressing the marketing

strategies of a hypothetical small Iowa retailer. To better understand and propose marketing

strategies for any company, it is vital to know the competitive advantages and disadvantages of

the firm. Barney introduced the RBV framework in 1991 to analyze the competitive advantages

of a company. The RBV states that a company can achieve competitive advantages by deploying

valuable resources and capabilities (Pelt, 2010; Peteraf, 1993). While the RBV framework has

been used traditionally to analyze larger businesses in various industries (Lockett, Thomson &

Morgenstern, 2009), past studies have also shown its applicability to the small business context

(Campbell & Park, 2017; Carraresi, Mamaqi, Albisu & Banterle, 2016; Stanworth, Stanworth,

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Watson, Purdy, & Healeas, 2004; Welsh, Davis, Desplaces & Falbe, 2011; Westhead, Wright &

Ucbasaran, 2001). The tenets of RBV define sustained competitive advantage as a value-

creating strategy that is rare, non-imitable, and not simultaneously implemented by competitors,

and not easily duplicatable (Barney, 1991). In the present study, the RBV framework is used to

discuss and explain the competitive advantages gained by ‘Sanskriti,’ a hypothetical small

apparel business in Iowa that actively uses social media as a marketing tool.

The RBV approach is used to analyze a business’s internal strengths (such as firm

competencies) and weaknesses, to compete aggressively (Barney, 1991; Campbell & Park,

2017). RBV is also considered an extension of Porter's five forces as it helps businesses to

analyze their resources and build competitive advantages (Wernerfelt, 1984). The RBV

framework is based on three firm resources, namely: a. physical capital (online and off-line store

space and operating systems), b. organizational capital (i.e., reporting structure, culture, informal

planning, controlling and coordinating systems), and c. human capital resources (training,

experience, relationships, and insight of individual staff and managers in a firm) (Wernerfelt,

1984). These firm resources are also sub-categorized as administrative and strategic resources.

Any competency, asset, or attribute that improves a company's efficiency and effectiveness is

considered as a firm resource (Wernerfelt, 1984). Using the RBV framework, competitive

advantages and disadvantages for the hypothetical retail firm Sanskriti are discussed below.

Competitive Advantages And Disadvantages Of ‘Sanskriti’ Using The RBV

The hypothetical business that I have chosen for the context of the second question is a

small apparel boutique called ‘Sanskriti.’ The business is located in Ames, Iowa, and sells

fusion (i.e., Indian and the US) apparel while being sustainable and socially responsible. Fusion

apparel is a combination of two different styles of clothing that is inspired by culture (Arora,

2008). Typically, fusion apparel is an amalgamation of eastern and western cultures and designs.

Kazi & Sharma (2018) describe that an example of fusion wear could be wearing a kurta (a long

top) on jeans or wearing a skirt with a tunic top. The Indo-western fusion style is wildly popular

in India, such that designer brands have started carrying couture pieces in their stores (Kazi &

Sharma, 2018). Jewelry can also be designed in a similar manner by combining different styles.

The RBV helps to explain the competitive advantages and disadvantages of Sanskriti, which

would ultimately aid in better decision making and strategic management of the store. A

strategic analysis would also deepen the understanding of the market positioning of this small

business.

Based on the RBV’s definition that a business should be rare, valuable, and not easily

imitable, product differentiation would be one component that would make a retailer unique. For

Sanskriti, product differentiation is the most critical factor that sets it apart from its competitors.

Being the only fusion apparel seller in the Iowa region, any customer seeking such styles would

immediately purchase from Sanskriti. With proper marketing and publicity, Sanskriti can be

made more accessible to customers from other areas in Iowa as well. The product differentiation

of Sanskriti helps it to be valuable, not easily duplicatable, and rare. Digital media can play a

crucial role in ascertaining the brand value of a company and is an essential channel for

marketing. By virtue of marketing the product differently, the value of the brand can be

increased. By using SMPs, Sanskriti will level the playing field with its competitors, both large

and small. SMPs can help create awareness of products, engage with the customers, educate

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customers, and help increase the number of followers by organizing specialized events or pop-up

shops.

Competitive disadvantages are factors that lead to a lag in performance for a business

(Spacey, 2016). In the case of ‘Sanskriti,’ their major competitive disadvantage, based on the

analysis of internal systems, is their lack of human resources (i.e., to have a dedicated employee

to manage their marketing). Since the owner, Kayla, assumes multiple roles, she finds it hard to

dedicate the necessary hours to digital media marketing. However, one of their competitive

advantages has been her ability to successfully use social media effectively to gain a decent

number of followers, which has helped boost sales. Many times, her business has found it hard

to keep up with the demand, as products are sourced from authentic handlooms and weavers, and

she is hoping to get better at increasing the scale of the business.

Digital Marketing As A Competitive Advantage

Digital marketing is a vital asset to any small business, as it adds value for the product

through cost-effective methods and is an efficient resource as it creates more visibility for the

business. Aside from being cost-effective, digital marketing is advantageous to small businesses

in several ways. Digital marketing is definitely one of the competitive advantages of ‘Sanskriti,’

the hypothetical firm. However, they do not have adequate resources to measure the

effectiveness of digital marketing. With the help of data analytics software, such as Google

analytics, small businesses can measure the effectiveness of marketing techniques in real-time

and tweak the posts based on results to increase the exposure of the brand (Byrne, 2020). Digital

marketing can also add relationship value with its ability to reach the perfect target customer

using search engine optimization (SEOs). The SEOs help create a buyer persona, a fictitious

customer who possesses characteristics of the businesses’ ideal customer, which helps target the

right customer segments. Potential customers can also be targeted using the pay-per-click

feature on Facebook or Google search (Byrne, 2020). The analyses of SMPs, as a firm resource

within the RBV framework, will aid in explaining how social media and digital marketing may

enhance a small retailer’s competitive advantage.

Distinction

‘Sanskriti’ is unique because of the distinct and innovative product line. They are the

only Indian fusion apparel company in Ames, and that definitely gives them a monopoly over the

market. The quality of products is relatively high, as they are sourced directly from weavers and

handlooms in India. However, the disadvantage of being the only business in the local market

would also mean that people might not be aware of the concept (fusion apparel). Sanskriti is

mainly located in Ames, Iowa. However, it could also be considered a destination retail store

due to the unique and scarce nature of fusion apparel retail boutiques in this market.

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Figure 2

Market positioning of Sanskriti

The RBV states that a business should possess valuable assets to be competitive. In this

sense, the small retail owner’s ability to post relevant content on social media for the purpose of

attracting and engaging customers could be considered a valuable resource. Kayla, the owner, is

also customer friendly and solicits advice from her customers to include designs and products

that they wish to buy. In an age where having digital media strategies have become

commonplace, possessing the resources to promote a small business is invaluable. While other

small businesses in the area may lack the awareness or resources to be successful using digital

marketing, Sanskriti will be successful, given their resources and knowledge, making them a

strong competitor. RBV can be used in this way by any small business to assess its competitive

advantages and disadvantages, and to understand how to best utilize resources to reposition its

brand identity and increase sales.

The RBV has helped to effectively identify the positioning of Sanskriti amongst its

competitors. According to Barney (1991), the internal analysis of a firm helps develop strategies

that could lead to a competitive advantage. With the help of the RBV, it was easier to analyze

the market positioning of Sanskriti (Figure 2). Sanskriti is the only fusion apparel and accessory

store in Ames, making it unique, and as a result, it has a higher turnover. By offering unique

products, Sanskriti can easily stand out among competitors like Azhagu beauty (fusion

accessories), Worldly goods (non-profit fair trade store with products from all over the world),

The Loft (women's consignment store), and Jaksprat (handmade jewelry). The quality of the

products is also relatively high. Drucker (2014) mentions the importance of being innovative in

terms of products or services so as to have a competitive advantage. Product differentiation and

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quality of products are, therefore, the two main factors to position Sanskriti among its

competitors.

Creative Component Question 3

Develop a modified version of a digital marketing plan for the same hypothetical small

Iowa retail firm noted above. Assume that the firm needs to focus on: movement from

brick and mortar only to multi-channel operation, integration of digital platforms, and

modifying their practices to meet the needs of their customers in the presence of COVID-

19. Please include situational analysis for your digital marketing plan addressing customer

demographics and lifestyle/psychographics, market trends, competitors, and market

potential. This information should be based on market research and appropriately cited

sources from relevant literature.

Digital Marketing Plan For Sanskriti

A digital marketing platform is akin to a brick and mortar store. A digital marketing plan

will involve a full range of activities from email marketing, paid advertisements, search engine

optimization (SEO), and a social media marketing plan. Penalver (2019) mentions that the first

step to creating a digital marketing plan is to first define the goal of the business, target market,

positioning, and then create a content strategy that would help bring in more sales from the target

audience. Getman (n.d) suggests the next step would be to create buyer personas for the target

market and understand their purchase cycle. Defining the marketing plan and coming up with

appropriate ways to measure it would help create a fail-proof marketing plan. In order to

develop a marketing plan, a situational analysis has been conducted, as shown in the following

section.

I. Situational Analysis

A situational analysis is defined as “the systematic collection and study of past and

present data to identify trends, forces, and conditions with the potential to influence the

performance of the business and the choice of appropriate strategies” (Chaffey & Smith, p. 1).

Munoz and Huser (2008) suggest that a situational analysis enables an owner to conduct better

qualitative and data analysis in relation to the 4Ps (Product, Price, Place, and Promotion) for a

business. Different methods are used to conduct a situational analysis, but the overall goal is to

understand the internal and external factors that affect a business.

Modified Marketing Plan Framework

Based on the literature review and interviews conducted for this study with three small

Iowa retailers, a modified marketing plan is suggested for the hypothetical firm Sanskriti. The

small retailers were asked about their social media use during the pandemic and how they market

products using digital platforms. Their insights have been drawn to analyze the competitive

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advantages of the hypothetical firm and to provide new marketing strategies to move from a

brick and mortar to an online platform, as shown in the following section.

A. Environmental Audit

Demographic: The average customer of Sanskriti is a woman between the ages of 18 – 50 years.

She would be an Indian (born in or from India), Indian-American, American, or any other

ethnicity who likes to wear Indian and/or fusion clothes and accessories. The target customer is

primarily female because most of the products being offered by Sanskriti are for women. The

target customer would typically reside in Iowa. However, once digital operations are launched,

the customers could be from other regions as well. The products offered by Sanskriti will appeal

to Gen Z or Generation Z, people born between 1996 - 2010, and Millennials, people born

between 1981 - 1986. Gen Z is said to be the most pivotal customer segment for the retail

industry, because of its huge spending capacity (Generation Z: Latest Gen Z News, Research,

Facts & Strategies, 2020).

Cultural: Iowa State University is located in Ames, Iowa, and has about 31,825 students (Fact,

2018). The multicultural population at Iowa State University consists of 15% of the total student

population. This gives small fusion apparel businesses a lot of potential in a town like Ames.

Lanrai, Lascu, Manrai, and Babb (2001), found that Eastern countries are influenced by Western

styles and individualism but also adapt to dress-conformity (capturing collectivism). This

change is happening at different rates, and younger consumers were found to be more fashion-

conscious, trying to adapt to both ethnic and western fashion. Similarly, Western fashion has

had a considerable influence on Indian consumers. There has been a dramatic change in Indian

retail markets towards the adoption of westernized styles (Kautish, Khare & Sharma, 2020;

Lyonski & Durvasula, 2013). Lyonski & Durvasula (2013) found that there was an increase in

impulsive shopping, novelty, brand, and fashion consciousness among Indian consumers. This

shift in shopping preferences and adaptation of other styles gives small businesses an opportunity

to be innovative with a new product segment. Apart from students and their parents, there are

many travelers who visit Ames, and this may further position the boutique Sanskriti as a cultural

destination and shopping experience.

Technological Trends: Small businesses in Iowa have been using social media apps like

Facebook and Instagram for several years. These two are the most popular apps, and they have

not been using other social media apps such as Pinterest, Twitter, and Snapchat. From the three

small business interviews that were conducted for this study, Facebook is quite popular. The

small retailers are familiar with the technology and have managed to increase sales even during

the COVID-19 pandemic. (Anonymous participants in discussion with the author, October,

2020).

B. Competitive Analysis

Competitors – No other Indian fusion apparel stores exist in Ames. There are several specialty

shops such as Moorman Clothiers, which specializes in Men’s apparel clothes, Worldly Goods

(fair trade and cultural products), and several second-hand clothing stores (Chamber of

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Commerce, n.d). Apart from these small businesses, Azhagu Beauty (an online business) has

several fusion accessories, making it a direct competitor. Another small business that sells

products that have designs similar to Indian fusion accessories from Washington, Iowa, is

Jaksprat. An analysis of strengths and weaknesses of these businesses are given in Table 1.

Table 1

Strengths and weaknesses of small retailers in Iowa

Strengths Of Small Businesses In The US:

- There is a space in the market for establishing the business, as there are not that many

competitors that have a similar fusion product category.

- Customers are knowledgeable and are interested in learning more about other ethnicities.

- Small businesses offer unique product categories (Kappel, 2016).

- The self-employment rate for Asian and other minorities in the U.S. varies from 6 – 10%

in 2020, which means that there is more scope for minority groups to establish a business

(Small business administration, Office of advocacy, 2020).

Weaknesses Of Small Businesses In The US:

Strengths of Apparel retailers in Ames

such as Worldly goods

Weaknesses of apparel retailers in Ames

such as Worldly goods

• Established customer base

• Advantage of being in the same city

for several years

• Are not very active on social media

• Limited product categories

• Lesser appeal to Generation Z (as they

are younger than Millennials or baby

boomers)

Strengths of Azhagu Beauty (accessories) Weaknesses of Azhagu Beauty (accessories)

• Entirely online and actively uses

social media to attract customers

• Similar product category

• Does not have a brick and mortar store

• Newly established and will take time

to build a more loyal customer base

• Do not have an apparel product

category at the moment

Strengths of Jaksprat Jewelry

(Washington, IA)

Weaknesses of Jaksprat Jewelry

(Washington, IA)

• Full operational online

• Social media marketing staff to handle

online posts and pages

• Accessory designs are very edgy and

fashionable

• Does not have a brick and mortar store

• Low ability to scale up the business

• Do not have an apparel product

category at the moment

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- About 60% of businesses survive for at least two years, and 50% survive for five years

(Small business administration, 2012). These issues are mainly due to the unavailability

of resources or lack of knowledge (Anderson & Ullah, 2014).

- Rural small businesses face many more issues because of their remote location, financial

constraints, aging population, etc. One-third of the small businesses in the United States

claim that they have more than $20000 in receivables, and several others have cash flow

issues, competition, or do not have the right team of employees (Otar, 2018).

- In the COVID-19 pandemic, around 7.5 million small businesses in the U.S. are at risk of

being shut down permanently (Lacurci, 2020). To support businesses financially, the

government also released disaster loans (SBA, 2020).

C. Industry Trends

There have been various changes in the retail industry over the past decade, but especially since

the pandemic began in March 2020. Some of these changes are discussed in detail below.

1. Changing Trends Towards The Customer: Since the primary goal of the business would be

to move to an online space and improve the transition between online and the brick and mortar

store, social media platforms would be the best way to engage different target markets. It is vital

to keep the focus on consumers and turn them into the most prominent promoters of the store

brand. The marketing funnel approach is how marketing was done in earlier times, where

products, not customers, were the key to sales. However, the more currently relevant flywheel

approach is customer-centric, and companies focus on Word-of-mouth (WOM) and E-WOM

techniques.

Figure 3

Customer trends

2. Brick-and-Mortar Shift: Physical retail stores were seeing a shift to e-commerce even

before the COVID-19 pandemic. The drastic shift to online markets nearly forced 60% of

retailers to temporarily close their brick and mortar stores nationally. The pandemic has also

forced small businesses to shut down for several months, which could lead to permanent closures

(Deloitte, 2020). Store maintenance and sustaining in-store sales during COVID times are also

challenges for small businesses, given social-distancing restrictions (Forbes, 2020). Although

there is a huge shift from brick and mortar to e-commerce, due to lesser barriers of entry, the

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online market has become saturated and several retailers, like Bonobos and Amazon-go, are

moving to a brick and mortar format (Briggs, 2015).

3. A Social Purpose: KPMG’s 2020 Report suggests that retailers are looking for more than

profitability and sales as primary business objectives (Vader & Martin, 2020). Likewise,

consumers seek companies that support social causes. Ever since the pandemic, companies have

been changing their business models to demonstrate that people are more important than profits.

Brands that stood for a cause and impacted people were found to grow more than two and a half

times than other companies not supporting social issues.

D. Marketing Trends

4. Increase In Digital Profits: Online sales have increased by about 55% since the start of the

pandemic. Specifically, mobile sales accounted for about $72 billion of the total e-commerce

growth since 2019. Although there has been a high increase in mobile retail, the pressure to

maintain sales growth is also very high (Deloitte, 2020). According to a report by the National

Retail Federation, about 52% of the U.S. population prefers convenience over any other

shopping attribute. Convenience, coupled with the pandemic, has contributed to this shift to

mobile shopping.

5. Importance Of Social Media Presence: Retailers are more aware of the increasing popularity

of brands on Instagram. They are now making holistic changes to visual displays in the store and

adding experiences that customers would want to share. Retailers are working towards creating

more such ‘instagrammeable moments’ in their retail and digital spaces. Displays that have a

backdrop, like a flower wall, where people could take pictures are trending among customers

(Eldor, 2020).

II. Segmentation And Targeting The Customer

Sanskriti’s Business Profile

Customer segmentation can help identify potential and current customers, which could

enable retailers to provide innovative products and services that cater to their needs. According

to Randazzo, (2014, 29-33), customers can be segmented into three main categories:

1. Key customers

2. Customers who can increase sales (underpotential)

3. Customers who are not users (non-users)

Customer segmentation is used to devise the right marketing strategies, right words, and

right ads. Customer segmentation also serves as the basis to create buyer personas (Alexakis,

2020). Randazzo, (2014) also mentions that price is a significant factor that affects customer

segmentation. For the purpose of this question, I have created several hypothetical customer

segments, as shown below in Table 2 and Table 3. The primary customer segment for Sanskriti

is the female market segment, which can also be classified into brick and mortar shoppers or

14

existing users, and digital users (who primarily shop online). The segments mentioned below are

not mutually exclusive.

Table 2

Type of customer segments

Type of customers Location Marketing/Promotional

Plan

Existing Users Brick and Mortar store Emails w/ information on

discounts and offers,

Loyalty cards, Greetings,

and discounts on special

occasions.

Digital users FB and Instagram followers Affiliate links and special

coupon codes

Table 3

Potential customer segments

Mobile website users New Mobile website Popups on the website with

discount codes and nudges to

purchase

E-commerce store visitors Both web-based and mobile

websites

Nudges to push people who

have items in the cart to buy

suggested items,

Table 4

Buyer Personas for Sanskriti’s Gen Z Digital Users

Target

Markets Demographic Info

Gen Z Age: 18-29

Gender: Mostly Women

Household $9000 - $25,000 +

15

income:

Level of

education: High school diploma and/or college

Location:

Lives in Ames (apartment or dorm) during school time and go back home (Mostly

within Iowa, some in neighboring states)

Shopping

behavior:

Shop both in-store and online, Facebook, Instagram, Amazon, mobile shopping,

and websites

What

products

they are

buying: Fusion suits, skirts, and accessories

What

products

they want: Reasonable price point, funky prints, colors that are both bright and neutral

Gen Z

Insights

- 59% of Gen Z customers trust the brands they grew up with

- 44% prefer to submit new product and design ideas

- They share opinions, they provide twice as more positive feedback than

complaints

- They look for brands to be transparent and authentic

- Have been predicted to have the highest spending by 2026 and are the future of

retail

Table 5

Buyer Personas for Sanskriti’s Millennial Digital Users

Target

markets Demographic Info

Millenials Age: 30 – 40+

Gender: Women mostly

Household

income: $50,000 +

Level of

education: Undergraduate degree or higher

Location: Lives in an apartment or house in Ames, Des Moines, Ankeny, or other Iowa

towns close by

Shopping

behavior:

Shop both in-store and online, Facebook, Instagram, Amazon, Mobile shopping,

and websites

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What

products

they are

buying Fusion pants and jackets, and accessories

What

products

they want:

Unique styles from designers and ethnic prints like Bandini (tie and dye), more

oxidized jewelry

Millennial

Insights:

-Top sources for online buying are websites, Facebook, and Instagram.

-A majority of people use laptops or mobile phones to purchase online.

- Customers prefer customization of products and are willing to try out multiple

products to find the one that best fits them best.

- Millennials always are looking for ways to make their life easier and more

convenient. Millennials tend to research products and alternatives before buying.

Creative Component Question 4

To validate your digital marketing plan, please develop a set of 3-5 key research questions

regarding digital readiness and digital marketing efforts for small Iowa retailers in the

COVID-19 environment. Based on the research questions, please develop an interview

script and conduct interviews with 3-5 small Iowa retailers. Transcribe the interviews and

include transcript summaries and the interview script in an Appendix section of this paper.

Objectives Of The Study

The purpose of this research is two-fold. First, the study aims to understand strategic

differences in the use of social media, specifically Instagram and Facebook, by small Iowa retail

businesses in their marketing efforts. A second objective is to understand the effects of the

COVID -19 pandemic and how social media marketing has helped small retail businesses. The

following research questions were posed to examine digital readiness and digital marketing

efforts by small Iowa retailers in the COVID-19 environment.

Research Questions

RQ1: Are small businesses ready to undertake a digital overhaul to their current marketing

plans?

RQ2: How effective are social media marketing methods towards developing customer networks

during the pandemic?

RQ3: How has digital media marketing helped small businesses to survive/keep up during the

COVID-19 pandemic? (Refer Appendix A for the interview script).

17

To address the research questions posed above, a research interview was conducted with

three small retail business owners in Iowa. Questions were asked to identify their social media

marketing use and their efforts to manage the COVID-19 pandemic. Please refer to the interview

script in Appendix A.

Creative Component Question 5

Based on your digital marketing plan, please address the following:

Propose 5 viable digital and/or innovative marketing strategies for your hypothetical small

retail operation. These strategies may have synergies for store, online, and other channels

as you may suggest for this firm. Provide solid reasoning for your selection of each

proposed strategy, based on your market research and small retailer interviews. Also,

explain how the strategies may create competitive advantages for the small retail firm.

Marketing Strategies For Sanskriti – A Hypothetical Retail Firm

Marketing strategies are typically comprised of a larger picture that helps achieve the

goals of a business (Higa, n.d). This concept has been taken into consideration to devise a

marketing strategy for Sanskriti, a hypothetical small retail firm. The three interviews of small

retail businesses in Iowa and the literature review have also been used to plan better marketing

strategies for the hypothetical firm that is transitioning from a brick and mortar store to an online

platform. These strategic changes will allow Sanskriti to better manage and survive during the

pandemic. In order to create effective marketing strategies, a vision and goals for the business

are specified below.

Vision and Goals: The main goal for this business is to survive the pandemic by transitioning

into an online website and increasing sales online.

Marketing Goals: Increase visibility online and increase online sales by 30%.

Marketing Strategies: Following marketing trends that have been successful for similar

businesses would help Sanskriti understand the way consumers like to buy. It would also help

them to keep up with the changing consumer behaviors and priorities, cater to the target market,

respond to the changes in the market, and stay relevant in a competitive market (Decker, 2020).

The following is a proposed set of digital marketing strategies customized to the needs of

Sanskriti.

1. Leveraging Social Media Marketing Trends

Facebook – This platform would be useful to engage an older customer segment between 40 –

60 years of age. Chen (2020) mentions that about 68% of Facebook (FB) users are between the

age of 50 – 64 years old. Participant 2, the owner of an accessory business in Washington, Iowa,

mentions, “I think Facebook also gives more accessibility for an individual to get in touch with

you,” confirming that it aids in staying connected with different networks (Anonymous

18

participant in discussion with the author, October, 2020). Since the primary target market for

this business is Indians (born or are from India), Americans, and Indian Americans, using FB

would be ideal for promoting the product online.

Instagram – Younger audiences between ages 20 – 40 have been shown to be more active on

Instagram. According to Statista (2017), 23% of teenagers use Instagram. Since this data was

collected only three years ago, most of the users now would be around 20 – 25 years old and

seem to be enjoying the newer features of this platform (Chen, 2020). Approximately 57% of

Instagram users are between 25 -30 years old, making it ideal for targeting the younger audience.

Posting content that appeals to the different age groups on Facebook and Instagram would enable

more visibility and sales overall.

2. Mobile Friendly Website Design:

Mobile phone marketing was wildly popular in 2015, during the holidays. With the

evolution of smartphones, it is now possible to drive shopping traffic to websites and apps

(Fulgoni & Lipsman, 2016). Especially during the holiday season, customers have been found to

be more engaged in activities like Black Friday and Cyber Monday sales due to smartphone use.

3. Instagram Shop:

Linking Instagram shops to the retailer’s POS system would enable consumers to conduct

shopping that is more convenient. Instagram allows a business to tag five different products per

page, and when you tap that page, it will show the price of the tagged product, as shown in

Figure 4. This content also appears in an exclusive shopping feed (Law, 2020). An Instagram

shop has several advantages:

a. It allows for easy access to the website

b. The business does not have to continually update the website on the ‘bio page’ of the business

profile.

c. It provides a great way to get a user experience without hindering the posts

d. It increases engagement with posts and provides a high user intent

Apart from the several advantages mentioned above, engagement and sales can be

monitored through Instagram Insights. The pandemic can be the perfect time for Sanskriti to

adopt a mobile-friendly website design to make it easier for customers to shop and bring more

brand awareness. Online shopping would make customers feel at ease during these uncertain

times as well.

19

Figure 4

Instagram Shop

Figure 4

Instagram Shop Feed

4. Micro-Influencers:

Influencer marketing plays a significant role in social media marketing. Influencers have

found their niche in social media and have the ability to convert leads to customers. Influencer

marketing has been used for some time with celebrity endorsements in the retail industry, and

now micro-influencers follow the same logic. Micro-influencers are defined as people who have

a niche area and have between 1,000 – 10,000 followers (Bernazzani, 2019). Micro-influencers

are everyday people and are not hard to reach out to, unlike celebrities, making them a more

cost-effective option. These influencers have to be carefully chosen based on the target market

of the business as they have a quick turnaround. Choosing the right micro-influencers is crucial

as they have a targeted audience and can change the minds of customers positively or negatively.

Decker (2020) also mentions that micro-influencers have hyper-engaged followers on their posts

even if they have a fewer number of followers. Compared to celebrity influencers who have

millions of followers, when they promote a fashion brand, a majority of them might not be

interested in apparel, and that could be a massive loss for the brand. Whereas, a micro-

influencer could have 1,000 followers, of which 200 people are interested in fashion, and 100

apparel companies follow them (Bernazzani, 2019). Additionally, cross-promoting products

with micro-influencers and other companies would potentially help both parties to gain more

followers. They are the future of marketing and have real potential by bringing in likes,

followers, and more purchases. During this pandemic time, where people are forced to be at

home, micro-influencers can be the most efficient way to drive sales and reach customers.

5. Paid Social Media Advertisements:

Facebook and Instagram now have paid advertisement options where individual posts can

be boosted when the correct target market is chosen (Chen, 2020). These advertisements can

20

range from $5 to any upper limit and have been found to be very useful. Additionally, a content

calendar would help plan the types of posts and when to post them strategically to get more

engagement. Collaborating with photographers and models as a cross-promotional activity

would be a cost-effective and efficient way to obtain content for the holiday campaign and

general social media posts. Newberry (2019) mentions that there are several types of ads that

Facebook allows a business to use, such as Post ads, video ads, poll ads, collection ads,

experience ads, dynamic ads, lead ads, messenger ads, story ads, etc.

6. Holiday Campaigns:

Sanskriti, will have two separate holiday

campaigns for Thanksgiving and Christmas, and

will have a mini-campaign for Halloween. Holiday

campaigns help increase sales for small and larger

businesses. Small businesses need to be supported

as they make valuable contributions to society. For

example, small businesses support local causes,

help sustain local culture and diversity, create

employment opportunities, and contribute to the

development of the local economy (Crowe, 2006;

Heinen, 2014). Unfortunately, about 55% of

shoppers prefer to shop from large retailers due to

higher brand awareness (Bose, 2019). In order to

compete with retail and e-commerce giants, small

businesses are moving towards digital marketing

strategies by adapting to social media. Jones

(2010) found that about 90% of Americans

celebrate Christmas. This opportunity could be

used by Sanskriti to boost sales and encourage

consumers to support local small businesses in the

process as people would be shopping for the

holidays. A sample holiday campaign post is shown

in Figure 5.

Figure 5

Holiday campaign sample

Financial Plan:

A budget for the proposed digital marketing plan for Sanskriti is shown below in Table 6:

Table 6

Sanskriti Digital Marketing Budget

21

Proposed Budget

Marketing

Item Number Cost Total

Expense

Giveaway box special 2 Large - $200, Small box -

$50

$250

Sponsored Ads through

Facebook and Instagram

10 $5 per day, send to friends

and followers

$50

Email advertisements 2 $9 $18

Purchase own domain for

online website

$200

Props for social media

pictures (This will be

accounted for by visual

merchandising as well -

Props to be shared) –

Props will be bought from

Micheals to make it

cheaper

$50 $50

SEO tools TBD Approx. $500

Instagram Shop $0.70 - $1.00 roughly per

click = $10 roughly?

$20

Adobe Photoshop for

editing (Having 1 account

for photoshop will be very

helpful.)

$129 per year $129

Staff to post regularly $11 per hour * 20hrs * 12

weeks

$2640

Total =$3377

Creative Component Question 6

Explain briefly how you would assess the performance of each proposed strategy. Provide

some reference citations to support your selection of each strategy.

22

There are several ways in which Sanskriti could measure the effectiveness of their digital

marketing plan. Google Analytics has been one of the most used by businesses to understand

search words to find the needs of customers (Saran, 2018).

Facebook and Instagram Analytics

Instagram Insights can be used to analyze emerging trends on Instagram,. They provide

insight on interaction for each content posted, number of new followers reached (Instagram

Insights, n.d). The discovery sections show how people found the content and how the

engagement looks for each post. The promotion section provides more information on whether a

post or product has been promoted (Facebook Analytics and Insights, 2020). Facebook has a

similar analytics platform where there is a specific tab that provides a complete overview of how

the page is performing (Newberry, 2020). They also have an additional analytics section for

‘posts.’ The post analysis is more detailed and is split into three tabs: a. when fans are online, b.

Post types, and c. top posts from pages you watch. Facebook post analytics help to analyze the

likes, the engagement, the views for each post when customers are online, etc. This would give a

business owner/social media marketing manager a good idea of what days and times are ideal for

posting content.

Analytics To Monitor Website Performance

Google Analytics is a very important platform that can be added to the website to analyze

the performance of the website (Saran, 2018). There is an option on Google Analytics that

allows us to check the ‘behavior’ of pages to see the most well-performed page on the website.

AHREF is another paid software that helps identify the most used viewed pages.

Search Engine Visibility

Google Search Console is another tool that

helps understand a website’s search engine presence

(Saran, 2018). Even if the owner decides to use the

search engine console themselves, they would be

able to optimize their website. Site administrators or

web developers could help the business owners code

the website according to their needs to ensure that it

is mobile friendly and fix indexing errors (About

Search Console - Search Console Help, n.d). Search

Enabler, AHREF, and specific other tools can help

provide a full technical report for the website

(Haselmayr, 2013). The advantage of Google

Analytics is that it is free and will be the best

budget-friendly option. However, there are several

other paid software that could be used depending on

the goal and budget of the business.

Figure 6

Online analytics

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Creative Component Question 7

Tie in your stated theoretical perspective and use it to support your reasoning for the

strategy set you have proposed.

The research-based view (RBV) framework is a methodology used to identify the

competitive advantages of a business (Barney, 1991). These competitive advantages help the

business develop them further to compete effectively with its competitors. Similarly,

competitive disadvantages could be worked on so that innovative strategies can be used to

further strengthen them. Earlier in the paper, digital and social media were identified as trending

marketing strategies used in the retail industry. Having said that, most of the smaller businesses

typically operate as brick-and-mortar stores only and are not fully functional online. The

COVID-19 pandemic has further forced businesses to move online, and several businesses are

unable to survive during such turbulent times. ‘Sanskriti’ has utilized the RBV framework to

analyze its competitive advantages, which is the owner’s ability in social media marketing. She

will utilize this skill to make her business fully functional online and slowly transition from a

brick and mortar only store to multi-channel. Through the RBV framework and SWOT analysis,

it was clear that Sanskriti is unique because of the products it offers, and with good digital

marketing and promotion, the chances of the business being successful are very high.

Analysis of the competitive advantages of Sanskriti enabled us to devise several

marketing strategies that would enable this to move from a brick and mortar only to a multi-

channel platform that leverages online capabilities for marketing purposes. A financial budget

has been proposed so the owner can make an informed decision and choose the digital marketing

strategies of best fit. The RBV framework is based on Porter’s concept of differentiation, which

can be in terms of innovative products or services. Innovation for Sanskriti is the product itself.

The business provides products that are unique and not easily replicable by other competitors.

Through product differentiation, Sanskriti definitely stands out.

By using social media platforms, Sanskriti will be able to survive the pandemic and

achieve its primary goals. Innovation for this company during the pandemic would be through

social media and digital media marketing. One of the retailers who were interviewed about

surviving during the pandemic mentioned, “through social media and having an e-commerce

website; we have been able to sustain and have really had great sales through the whole

pandemic.” (Anonymous participant 1, in discussion with the author, October, 2020). For

Sanskriti to survive and thrive during this pandemic, mobile-friendly websites, Instagram shops,

and Facebook posts will promote content and, at the same time, increase brand awareness.

Further, an online presence also empowers the business to scale up by providing to other states in

the Midwest or across the U.S., and at the same time, allows the business to target potential

customer segments.

24

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Appendix A

Interview Script

RQ1: Do small businesses understand the benefits of social media?

a. What does business growth mean to you and how has/will social media help your

business to grow? Does it mean just financial growth? Or an expansion in assortment?

b. How do you engage your customers and let them know about new products, events or

other promotional activities for your business? Could you tell me about the kind of

responses you get?

c. Could you tell me about the kind of posts that you focus on?

d. Has social media marketing helped you to grow your business?

e. Have you noticed if a specific kind of post leads to an increase in website/social media

traffic?

RQ2: How effective are social media marketing methods towards developing customer

networks during the pandemic?

a. How would you describe the ways in which you connect with customers, suppliers, and

competitors?

b. How do you stay in touch with your customers during this time? Could you give a few

examples of your business networks?

c. Do you think that using SMP has helped you become a stronger part of the community?

For example: Do you have a Facebook group where people can stay in touch and discuss

things they have in common?

d. Which SMP has helped you keep in touch with other members of the community?

e. Can you tell us how these community networks help your business? What kind of help do

you receive from them?

RQ3: How has digital media marketing helped small businesses to survive/keep up during

the COVID-19 pandemic?

a. How would you say COVID-19 has affected your business plans?

b. Could you talk a bit about how business has changed since the pandemic?

c. What changes in marketing have you made since the pandemic started? How have your

customers responded to these changes?

d. How has social media and digital marketing helped your business navigate changes

caused by COVID-19?